Kenya rakes in Sh300b in FDI amid grim forecast

Pressure on the government to address the plight of tenants, especially casual labourers many of whom have lost jobs.

Amani National Congress party leader Musalia Mudavadi has called for tenants to be protected against eviction.

“Citizens and businesses will need safety nets, including protection against evictions by landlords. They also need protection against bank loan interests in these difficult and uncertain times,” said Mudavadi in a statement.

Real estate developer Fusion Capital offered its tenants a rent concession of 30 per cent on one of their commercial properties for three months from April 1 due to what Executive Director at one of its properties in Nairobi Mwangi Kimotho said was “the severity of the pandemic and the strain it has put on businesses across the country and the world at large.”

The firm’s Chief Executive Daniel Kamau had said a 100 per cent waiver was not feasible as they also needed to pay their employees, secure the premises, pay for water, security, electricity, and maintenance of the building.

One of the major expenses for real estate developers has been loan repayments.

Pushing for waivers

Bad loans, technically known as non-performing loans (NPLs), have surged from an estimated Sh7.2 billion or 12 per cent of the total in 2010 to Sh53.9 billion as of June 2019.

“The Real Estate sector registered the highest increase in NPLs by Sh6.1 billion (15.8 per cent) due to slow uptake of housing units,” read part of CBK’s Quarterly Economic Report for the second quarter of 2018.

Property managers say it is “unfair” for landlords to solely bear the economic pains caused by the coronavirus pandemic.

Broll Property Group Managing Director East Africa and Indian Ocean Jess Cleland said the real estate sector is set to be hit hard and urged for players in the value chain to “sit down” and review the best options.

Most tenants are pushing for rent waivers and discounts, but landlords have to contend with things like service charges for buildings.

“The expectation that landlords must bear the entire pain of the situation is unfair,” said Cleland while speaking as a panelist on an online real estate discussion.?

A section of landlords, especially in low-income neighbourhoods where the economic shock of the coronvirus pandemic has hit hard, have resorted to crude methods in collecting rent.

For instance, a landlord at an apartment block in Juja, Kiambu County removed doors to several houses after the tenants delayed their rent.

Water and electricity were also disconnected.

Another landlord in Eldoret removed the roofing sheets from a tenant’s house over a rent arrear of Sh500.

The issue of putting a moratorium on payment of rent has been fodder for discussion in different parts of the world grappling with the pandemic. 

The Ugandan government has also persuaded landlords not to evict tenants at these difficult times.

“Landlords should not be allowed to evict people for not paying rent. This should not be allowed... the world is not ending, the shutdown is for a limited period, and it will end. The debt can be cleared after we are through with this,” Uganda’s President Yoweri Museveni was quoted as saying by a local daily. 

In Australia, Prime Minister Scott Morrison announced new rental waivers and deferrals for commercial tenants hit by the impact of the coronavirus crisis. 

The IMF has called for governments to be more active during this period in protecting both the tenants and homeowners. ?